Covid-19: Impact on current commercial relationships with ...€¦ · • Whether liquidated...
Transcript of Covid-19: Impact on current commercial relationships with ...€¦ · • Whether liquidated...
Covid-19:
Impact on current
commercial relationships
with Government
Kelly Stricklin-Coutinho
Barrister
Some scenarios
• Have a contract & performance difficulties
• Have a contract & covid-19 necessitates changes to the terms
• Have a contract & seek to justify changes/new contract
• Want a contract & bid to provide goods/services required
• Competitor has won a contract; you object
Performance Difficulties (1)
Key issues are likely to be:
• Whether or not force majeure clause is triggered
• Whether the contract is frustrated
• Whether liquidated damages clause is triggered
Performance Difficulties (2)
Measures to alleviate difficulties:
• Note the application of the (Procurement Policy Notes) PPNs
• Deals with:
– exceptional circumstances to procure goods, services, works – contracting
arrangements under Public Contracts Regulations 2015 (PCR)
– Supplier relief
• Also note specific guidance for Construction industry
Performance Difficulties (3)
What else is possible?
• Anything else Government can do will be circumscribed by ordinarily
applicable legislative regimes and public law principles
• Deviation from issued guidance should be considered carefully
Change of circumstance =
change to contract (1)
The need to change the contract might be driven by:
• Change to volume required
• Need to structure operations differently
• Decrease in ability to service contract/increased costs associated
with Government requirements
• Pricing no longer suitable for new circumstances
Change of circumstance =
change to contract (2)
Changes have to take place within the scope of applicable regimes:
• PCR 2015 (e.g. rules on modification or extending a contract)
• Competition law: regime largely unchanged; specific exceptions
• State aid: Temporary Framework; otherwise business as usual
• (To the extent applicable) regulatory regime or local government
powers
Change of circumstance =
change to contract (3)
Otherwise, risk:
• Not completing
• Provoking challenge on grounds of (at least) illegality/unlawfulness
• Audit of compliance by relevant government department
• Some of those risks manifest potentially years later; risk of financial
sanction/damages claims
Opportunities? (1)
• Can you use the ongoing performance of your contract to influence
the outcome of a dispute with a different part of government?
– Framing of the issue is important; significant difficulties
– Likely to be subject to policy (e.g. Litigation Settlement Strategy for HMRC)
– Likely to face difficulties as to regulatory regime (where applicable)
– Likely to face practical issue of avoiding a precedent/procedural unfairness
– Likely to be a more proportionate way to deal with impact
Opportunities? (2)
• Can you use a pause in work to shore up your position? e.g.
underperforming on a grant funded project
– Expect any relaxation of approach to link directly to covid-19
– Different where dealing with same department/circumstances
– Beware of:
• Whether the arrangement could look like state aid
• Careful recording of reasoning
Want to contract
Bidding to provide services/goods currently needed to respond to
outbreak:
• Work within specific frameworks – PCR 2015
• Plenty of flexibility; within the rules
• Webinar on Procurement Regime on our website
Competitor has won contract;
you objectPossible courses of action:
• Examine whether a procedure was used
• Examine whether choice of procedure was within reasonable range
of decisions
• Any specific aspects unsatisfactory; seek information asap
• Consider whether own criteria/guidance complied with
• Consider broad application of competition principles
Competition Principles
UK:
• Regime remains, apart from specific let outs
• Enforcement unlikely to be different in principle
• Resourcing
EU:
• Note Commission concerns on global competition
• State aid restricted to companies not in a “tax haven”?